UK manufacturing downturn continues but does not deepen
The IHS Markit/CIPS UK manufacturing PMI® remained at a six-and-a-half year low reading of 48.0 in July.
Production and new orders shrank as manufacturers faced the ongoing headwinds of political uncertainty, a global economic slowdown and the unwinding of stocks built prior to the original Brexit date.
Manufacturing production fell to the greatest extent in seven years, as companies scaled back output in response to a further solid decrease in new order intakes. Demand was weaker from both domestic and export markets, the later mainly reflecting lower intakes from the EU and China.
Employment decreased for the fourth month running, and at an accelerated pace, with reports of natural wastage, recruitment freezes and cost-control initiatives contributing to job cuts.
Some firms were still running down inventory holdings, built ahead of the March Brexit date’ others were commencing stockpiling ahead of 31 October. Stocks of finished goods continued to rise, albeit to a noticeably lesser extent than earlier in the year.
Price pressures eased with rates of increase in both input costs and selling prices the weakest for more than three years.
All of that said, manufacturers maintained a positive outlook in July, with more than 46% expecting output to be higher in a year’s time. Less than 10% forecast contraction. Optimism was linked to new product launches, an expected rebound in export sales, strong order pipelines, reduced uncertainty following Brexit and improved infrastructure, including 5G networks.